Basics of Investing
Information http://www.investopedia.com/university/beginner/ Trading vs. Investing http://www.investopedia.com/ask/answers/12/difference-investing-trading.asp The stock market It is very difficult to beat the market, often "hot stock tips" are already priced in, for instance if someone predicts a stock will go from $10 to $15 by the time most people have figured this out the stock may already be over $15. In this way you are competing with other investors to make predictions about the stock market. Risk Risk is as important as returns. Even if the information you have indicates the price will go up to $15 there are always things you could not possibly know which might crop up unexpectedly. Rather than put all your eggs in one basket you ought to diversify your investments, a large proportion of your investments should be in low risk stocks and funds. I hear going into the stock market will make me rich… It has the possibility to, but unless you’re incredibly lucky, the wealth will come over a long period of time. Decades, specifically. Going into the stock market is by no means a get-rich-quick scheme, but an investment for your money in the hopes that it starts turning into more money over time. Where possible, try to invest in government backed ventures – they’re very secure, so the risk that you will lose money is low. As such, the rewards you yield will be equally low. Always put more money into low-risk low-reward ventures than high-risk-high reward ventures, but still put a small portion into the latter. Hey, we can’t make you rich instantly, but you might as well give it a go. Just make sure that when you invest in high-risk high-reward ventures, you assume that the money is gone for good. Okay, okay, how do I start down this road? Make sure to have survival funds. Roughly 3-6 months’ worth of cash that will let you survive (pay bills and eat). Become a strong independent black women, and put aside a portion of your money. This will be for investments. Invest in something physical that will grow more valuable over time. Saving accounts are wonderful and all, but inflation can seriously neglect the value. I like to buy gold, just in case, but that’s personal preference. Always invest into three things: immediate cash in case of an emergency; long-term investments that are low-risk-low reward; and a small portion into high-risk high-reward ventures. I would put it into 20/60/20 ratio. Didn’t make sense? If I had 100 shekels, I would put 20 into immediate cash in case of an emergency, 60 into long-term low-risk-low reward ventures, and the final 20 into high-risk high reward ventures. Make sure you have a regular income. Things you can splurge on are: mattresses, your health, and your appearance. Nice clothes occasionally, the gym (or some sporty activity) to keep you looking delicious, and a good bed is always worth the money. How much money do I need to invest? You can invest starting with any amount of money. Unfortunately at low amounts trading costs will take a larger chunk out of your initial investments. That said, sites like TD Ameritrade offer commission free ETF's which eliminate those trading fees.